Mortgage Broker Recommended by Canadian Financial Planners
Better Financial Planning
A November 10, 2011 Globe and Mail posting on personal finance recently revealed that certified financial planners in Canada are recommending that clients “seek the help of a mortgage broker when it comes time to buy a house, or refinance or renew a mortgage.”
Is this a growing trend?
In a recent Canadian Mortgage Trends.com interview with Geoff Parkin, the President of the Mortgage Brokers Association of British Columbia, Parkin claims that mortgage brokers are in a position to provide the best rate competition for each specific client. Meeting the individual needs of different clients is part of providing excellent financial advice when it comes to mortgage issues.
This means that a broker is far more likely to understand the importance and financial ramifications of individual needs such as prepayment flexibility, line of credit options and even the need of a client to port interprovincially.
It’s no wonder that financial planners are recommending brokers over the banks when it comes to mortgages. For one, mortgage brokers provide their services at no cost to their clients. This means there’s no downside to seeking financial information about mortgage options.
On the broker’s side, there is strong motivation to provide education as a brokers income comes from matching a borrower with a lender. The lender then pays the mortgage broker for negotiating the match.
Another benefit of using a mortgage broker for your financial planning is the fact that brokers are required to give their clients the best rate available, or to disclose the reason the rate is higher and where the compensation is going.
Of course, it’s important that consumers do their homework before they choose a broker to be part of their financial management plan. Not every broker has the level of experience to provide sound mortgage advice. It’s important to find a broker with a solid reputation and proven experience.
If you do find yourself working with a rookie, it doesn’t need to be a problem. Everyone needs to start somewhere. Just make sure that the brokerage has a mentoring program where new brokers are given all the support necessary to ensure they give you the same level of service you would get working with a seasoned pro. In fact, you could receive better advice with two working on your needs.
It’s important to realize as well that not every new mortgage broker enters the field a complete novice. Bank lenders are transitioning into the broker industry. With this background, a broker gains the ability to guide you into the right financial planning for your mortgage needs quickly.
5 Things a Mortgage Broker Does for You that a Banker Can’t
While mortgage brokers are still a relatively new phenomena in Canada and British Columbia, they are rapidly becoming the preferred way to find a mortgage. One of the main reasons is this. Once a Canadian has purchased a home using a broker, there’s no turning back to the old way of doing things. This could just be because of these five services a broker provides that just doesn’t come as standard service from a bank employee.
1. Provide you with impartial advice
It doesn’t matter how well trained a banker is. Banks only have so many products to offer. A mortgage broker on the other hand has a much broader array of lenders to offer mortgages from. This means that the advice you receive is more balanced.
2. Offer you education, so you know what different mortgage options really cost you
This is another aspect of being impartial. Your mortgage broker’s job is to help you understand the different mortgage products that are available for your credit and income scenario. Your broker can help you develop an action plan so that even if you don’t qualify for a better mortgage now, you’ll be able to get a better rate after implementing the plan. That’s a service you aren’t likely to find at the bank.
3. Automatically look for the lowest interest rates possible based on your credit history and your income
Because a mortgage broker has so many more lenders to work with, it’s much more likely you’ll find a lower interest rate and a mortgage package that saves you money through a broker. Your banker may be willing to lower the rates if you start negotiating, yet there’s no guarantee there won’t be fees that erase those lower rates. A broker looks at all the loan costs!
4. Negotiate the best mortgage product possible based upon your credit rating
Negotiating with the bank isn’t easy. It takes time and energy. When you turn to a mortgage broker, you are turning to a negotiating expert. You are working with someone who knows how to find the best rates and how to work out the best deals for your benefit. It’s even possible your broker may find the best deal at your bank, one the bank didn’t offer you.
5. Review your mortgage several times a year to see if there’s a way to help you pay your mortgage off faster
The bank isn’t motivated to help you reduce your debt. That’s how it’s making money. Your mortgage broker doesn’t have anything to lose by helping you get out of debt.
Reasons You Should Consider a Mortgage Broker Over a Banker
PayLess-KeepMore
Buying your first Canadian home can be a bit overwhelming. It goes beyond the size of the commitment. Finding the right mortgage can make the difference between your home purchase becoming an investment or becoming the biggest drain on your finances for years to come.
This is one of the foremost reasons the mortgage broker industry has begun to make a major difference in Canada. Whereas before you had to go to the bank or credit union to find a loan, now you can go to a Canadian mortgage broker who has the power to connect you with other investors. There is no better way to get the best price and best structure available in the market.
Mortgage brokers make a great deal of sense for a first-time home buyer. It’s quite rare for someone who is new to buying real estate to know the ins and outs of negotiating the right mortgage product for his or her situation.
Your banker is banking on the fact that you think the bank is looking out for your best interests. Facts don’t bear this out. As I’ve mentioned before, a Bank of Canada report released in February 2011 suggested that its loyal bank customers were paying higher interest rates. It appears they were doing this based on the general assumption that their bank was going to give them the best offer, so they didn’t feel they needed to explore their options.
This isn’t right, and that’s where a mortgage broker can help. Finding the best option is what a broker is trained to do. In fact, this is what a broker must do to earn a living. A banker isn’t motivated to give you the best deal in the marketplace. A broker is.
That’s not all a broker does for you. After a careful review of your financial information, an honest broker can protect you from overextending yourself. While there may be mortgage products on the market that would allow you to do so, a careful broker will advise you as to exactly how much you can truly afford.
There are different mortgage products as well. A broker’s job is to help you decide which product is the best one for your short-term and long-term goals. That’s not something a banker is required to do.
Half of a percent may not seem like much to you, yet when you are looking at 20-years of payments it adds up to tens of thousands of dollars. And it is just such savings your mortgage broker is going to hunt for. That’s one good reason to consider a mortgage broker instead of a Canadian banker.
Debt ruining your retirement? Reverse Mortgage is the Solution.
Debt-Free with Reverse Mortgage
According to the latest Statistics Canada report, almost 20% of seniors find it necessary to continue to work past their retirement, often citing financial obligations such as mortgages and debt repayment as key factors in their decision to do so.
Adele and Jim, both 65, were so concerned about becoming a part of this group that they found themselves rather stressed. They did have modest RRSPs accounts and a small amount in a saving account. Their home had appreciated considerably in value over the years; however, they still had a mortgage that required monthly payments. In addition to the mortgage payments they also have a car loan payment for a car that Jim purchased recently. And with interest rates at historic lows not long ago, Jim and Adele also used their credit to help finance their youngest daughter’s post-graduate studies.
Jim took a look at his finances and decided that in order to make ends meet in the future he must continue working until the mortgage, car loan, and line of credit were all paid off. The only problem was that this could take years – years that Adele wanted to enjoy with Jim in retirement.
Adele and Jim decided to consult their financial planner. She recommended that they manage their debts differently by tapping into their home equity with a Reverse Mortgage loan available through CHIP.
CHIP Home Income Plan is a reverse mortgage. It allows homeowners 55 years or older to turn up to 50% of their home equity into tax-free cash, without any payments required until they choose to move or sell.
The CHIP solution was just what Jim and Adele were looking for. With the proceeds, they were in a position to pay off their debts, eliminating the monthly interest payments that were putting a strain on their finances. Although the interest on the reverse mortgage would continue to accumulate, their financial planner was confident that the combination of relatively low interest rates and future home appreciation would leave the couple with at least 50% of the equity in their home intact when they were ready to sell. So their present and their future were both financially secure.
“I could have been working into my early seventies if it weren’t for the Reverse Mortgage from CHIP Home Income Plan,” says Jim. “We always wanted to provide our kids with a solid start to life – a good education. I’m glad we were able to do that without sacrificing our hard-earned retirement.”
